LexCOMMISSIONER, SALES TAX, U.P. versus AGRA BELTING WORKS, AGRA
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COMMISSIONER, SALES TAX, U.P.
v.
AGRA BELTING WORKS, AGRA
APRIL 29, 1987
A
[R.S. PATHAK, C.J.I., RANGANATH MISRA
B
AND B.C. RAY JJ.]
U.P. Sales Tax Act, 1948-Section 3-A-lmposition of sales tax on
'be/tings of all kinds'-Effectof Notifications of 1958 and 1973.
The State Government Issued a Notification on November 25,
1958 in exercise of power vested nuder Section 4 of the U.P. Sales Tax c
Act, 1948. This Notification exempted 'cotton fabrics of all varieties'
from sales tax. Under it, patta as an item of cotton fabric stood exemp-
ted from tax liability. Subsequently, another Notification was issued on
December 1, 1973 nuder Section 3· A of the Act. This Notification
prescribed a rate of tax higher than that provided by Section 3 of the D
Act which contains the charging provision and prescribes a uniform
rate of tax on sales. Section 3-A empowers the State Government to
modify the rate of tax by Notification. This Notification of 1973 was
U..ued without withdrawing the earlier Notification of 1958.
The High Court, affirming the order of the Tribunal, held that In
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the absence of a Notification withdrawing the earlier Notification of
1958, sales tax wonld not be exlgible in tfrms of the Notification of 1973.
Allowing the Appeal,
HELD: (Per majority Pathak, CJI and Ranganatb Misra, J.,
F
Ray, J. dissenting)
1. The High Court was not justified in holding that in the absence
of a notification withdrawing the earlier Notification of 1958, sales tax
would not be exlgible in terms of the Notification of 1973. The order of
the Tribunal, which has been affirmed by the High Court, is set aside
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and the assessment restored. [ 96G I
2. The Notification of 1958 issued under Section 4 of the Act
exempted 'cotton fabrics of all varieties' from sales tax. The Notifica-
lion of 1973 under Section3·Aofthe Act prescribed sales tax of7% on
the sale ofbeltings of all kinds. There is no dispute that patta is a kind of H
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SUPREME COURT REPORTS
[1987] 3 S.C.R.
A
belting material and, on being treated as cotton fabric, was exempted +
from sales tax. [95FG]
B
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3. Section 3 is the charging provision; Section 3-A authorises vari-
ation of the rate of tax and Section 4 provides for exemption from the
tax. When after a Notification under Section 4 granting exemption from
liability, a subsequent Notification under Section 3-A prescribes the rate
of tax, the intention is to withdraw the exemption and make the sale
liable to tax at the rate prescribeil in the Notification. [96B-D]
4. As the power both for the grant of exemption and the variation
of the rate of tax vests in the State Government and it is not the require-
ment of the Statute that a Notification of recall of exemption is a condi-
tion precedent to imposing tax at any prescribed rate by a valid Notifi-
cation under Section 3-A, the second Notification can easily be treated as
a combined Notification-both for withdrawal of exemption and also
for providing higher tax. [96D-E]
D
5. The exemption was in regard to a class of goods and while the
exemption continues, a specific item has now been notified under Sec-
tion 3-Aofthe Act. [96FJ
(Per Ray, J _ dissenting)
E
1. Cotton beltings fall within 'beltings of all kinds' as notified
under Section 4 of the Act, being exempt from the imposition of sales
tax. As there is a general exemption granted by the Notifications issued --J,_
in 1957 and 1958 exempting 'cotton fabrics of all kinds', it is not possi-
ble to hold, in any view of the matter, that it will be excisable to sales tax
on the basis of the Notification dated December 1, 1973 under Section
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3-A of the said Act, by the Government. [98F; G-H]
2. So long as the general exemption granted under Section 4 with
regard to 'cotton fabrics of all kinds' continues, no sales tax can be
imposed on beltings of all kinds which fall within the 'cotton fabrics of
all kinds' and the general exemption under Section 4 will prevail over
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the Notification made under Section 3-A of the Sales Tax Act. [99GH]
3. It is not possible to subscribe to the view that since the Notifica-
tion under Section 3-A has been made subsequent to the Notification
issued under Section 4 of the Act, the subsequent Notification under
Section 3-A will prevail over the general exemption granted under Sec-
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tion 4 of the Act. [99H; JOOA]
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COMMR. SALES TAX, U.P. v. AGRA BELTING {MISRA, J.]
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